June 7, 2019

Jim Lundy Quoted in Financial Planning on the SEC’s Reg BI Package and its Regulatory Approach

Chicago partner Jim Lundy was quoted in a Financial Planning article titled “SEC’s Reg BI Cements Two-Track Regulatory Approach.” The article discusses the SEC’s new package of rules on investment advice for retail investors, where the commission confirmed that advisors and brokers have different functions and obligations, and that firms will have to revise their compliance and supervisory policies, procedures, and practices to come into compliance. The SEC also added new interpretive guidance regarding investment advice that is “solely incidental” to their brokerage business.

Jim said that the finalized rules and interpretations maintain the core elements from the original proposals, and noted that “there were not many meaningful changes.” Jim added that large firms with multiple branches and numerous individual representatives will face additional and significant resource commitments regarding developing compliance processes to supervise the conflict mitigation requirement, amongst other risks. Further, Jim advised that, after the implementation period, he expects the SEC’s Office of Compliance Inspections and Examinations to prioritize compliance with the new rules and guidance, specifically stating that, “Regarding the [SEC] examination program, everyone should expect that soon after the implementation period, the examination of these aspects of this rulemaking package will be one of the top priorities for the examination program.”

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